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cut a part of a question…A condition of the factoring agreement would advance 80% of face value of receivables at an annual rate of 7%
overdraft rate = 5%3 things
– what does face value means?
-how to deal with advancement
-why in the answer it did 80% * face value of rec * (7%-5%)The face value is the actual amount on the invoice.
I go through how to deal with factoring with an advancement in the free lecture on receivables management – I can’t type out the lecture here.
Without seeing which question or answer you are writing about, the 7% – 5% is presumably the extra interest cost of using a factor as opposed to financing it themselves.
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